“In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25 per cent tariff on $US50 billion of goods from China that contain industrially significant technologies,” Trump said in a statement.

“This includes goods related to China’s Made in China 2025 strategic plan to dominate the emerging high-technology industries that will drive future economic growth for China, but hurt economic growth for the United States and many other countries.”

“Made in China 2025” is an important economic initiative undertaken by the Chinese government to promote the development of key industries, particularly in the tech sector, over the next seven years.

According to the US Trade Representative’s (USTR) office, the tariffs will come in two parts. The first section will be implemented on July 6 and apply to 818 goods with a total value of $US34 billion. The second set, which includes 284 goods equal to $US16 billion worth of imports, will come later and be subject to additional public comments.

The list generally hits industrial goods rather than consumer items according to the USTR statement.

Trump threatened to impose further tariffs, should China decide to retaliate.

The White House said it is considering an additional set of tariffs on another $US100 billion of Chinese goods. In the statement, Trump said those measures would be implemented only if the Chinese strike back at Friday’s move.

“The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China,” Trump said.

The trade war escalates

“If you end up with a tariff battle, you will end up with price inflation, and you could end up with consumer debt – those are all historic ingredients for an economic slowdown,” Cohn said at an event sponsored by The Washington Post.

At the same event, Cohn also said, however, that the US needed to “enforce the rule of law” on what it has described as Chinese theft of US intellectual property.

Greg Valliere, chief global strategist at Horizon Investments, called the tariffs “a significant escalation of the trade war” and warned that there were four primary outcomes from the increasing tensions.

“Our take is that a trade war would bring four negatives – somewhat higher inflation; growing anxiety in the U.S. farm belt; uncertainty that could complicate long-term corporate planning; and a growing estrangement of the U.S. on the global stage.

Louis Kujis, head of Asia economics at Oxford Economics, said that the back-and-forth trade measures will be a modest drag on economic growth but despite the relatively minor hit the tariffs still make a difference.

“Such numbers still matter, and the increased uncertainty and risks will weigh on business confidence and investment, especially cross-border investment,” Kujis wrote. “Thus, there will be an impact on growth, in China, the US and elsewhere, at a sensitive time for the global economy.”

Pain in Spain

As Trump imposes the new tariffs on China, there is already evidence that his program is having a negative impact on some areas of industry and agriculture in Europe. In Spain’s Andalusia region, olive producers are reporting damage to their businesses already in relation to the tariffs.

The Guardian reports that a European Commission spokesman confirmed that exports of black olives from the region to the US fell by more than 40% at the start of 2018, with the spokesman noting that olive production in Andalusia had “a very significant economic and social impact.”

“The decision by the US Department of Commerce to impose unreasonably high and prohibitive anti-subsidy and anti-dumping duties on Spanish olives is simply unacceptable,” the commission spokesman said.

Earlier in the week, the US Department of Commerce said it would need to impose tariffs of 7% to 27% on Spanish olives because it believed producers in Spain were undercutting US rivals by selling their product for as much as 26% less than it is worth.

“This is a protectionist measure targeting a high-quality and successful EU product popular with US consumers,” the spokesman added.

Spain’s newly appointed agricultural minister, Luis Planas, also opposed the tariff’s impact, saying it was unjust.

“It’s an unfair measure because it has no economic or technical basis and it’s worrying as it could call into question the rules governing international trade,” Planas said, adding that he would raise the issue at a meeting of European Union agricultural ministers.